IMF Completes Uruguay Second Review

The Executive Board of the International Monetary Fund (IMF) today completed the second review of Uruguay's performance under a 22-month, SDR 150 million (about US$193 million) stand-by credit approved on May 31, 2000 (see Press Release 00/35). As a result, Uruguay will be able to draw, if needed, up to the equivalent of SDR 112 million (about US$144 million) from the IMF. The Uruguayan authorities have indicated that they intend to continue treating the credit as precautionary.

"Uruguay continues to face a difficult economic environment in 2001, with adverse external shocks and a severe outbreak of foot-and-mouth disease hindering the economic recovery that was anticipated in the program. The economy has shown great resilience and the authorities are responding to these challenges with renewed effort to attain sustainable growth. Among other things, they are maintaining cautious public sector expenditure policies, accelerating deregulation of the economy, and seeking to moderate labor costs, and have increased the pace of adjustment of the exchange rate band.

"In addition, the economic program for the remainder of 2001 has been revised to allow for a somewhat larger fiscal deficit. At the same time, the authorities are committed to a strong underlying medium-term fiscal position to ensure the sustainability of the public finances, lower the ratio of the public debt to GDP from 2003 onwards, and preserve Uruguay's good standing in international capital markets.

"Uruguay has made good progress in improving the supply conditions in the economy by accelerating deregulation and encouraging private sector investment. It is important that the full slate of structural reforms be implemented without delay," Aninat said.